Annual Report
Year Ended March 31, 2013

HARIMA CHEMICALS GROUP, INC.

Business Overview
The world economy remained generally stagnant during the fiscal year ended March 31, 2013. Despite
gradual improvement in the US, Europe faced an economic downturn caused by the financial crisis.
Meanwhile, emerging countries such as China that play a leading role in the world economy began to see adrop in performance. At the same time, the economic situation in Japan remained less-than-optimistic
despite the depreciation of the yen and the rise in stock prices that have continued from last year.
The business environment surrounding our group remained substandard. Lawter B.V., a subsidiary forwhich Europe is a major market, was particularly influenced by the downturn in the European economy.
Further, business results deteriorated due to increases in the price of oil, our main raw material imported
from the US.
As a result of these conditions, the group’s consolidated net sales for the current fiscal year decreased by
7,333 million yen (down 10.3%) year-on-year to 64,203 million yen.
In terms of revenue, operating income decreased by 2,538 million yen (down 81.5%) year-on-year to 576
million yen.
Ordinary income decreased by 738 million yen (down 34.2%) year-on-year to 1,422 million yen, with aforeign exchange gain of 932 million yen. Net income decreased by 796 million yen (down 78.6%) yearon-year to 216 million yen.
Provided below is an overview of business segments corresponding to the company's reporting segments.
We became a holding company in October 2012 and, as such, changed our business segments in the 3rdquarter of this fiscal year. In order to improve business efficiency, allow for quick decision-making, andclarify management responsibility, we introduced a new internal system for reporting on our businesssegments.
Further, the acquisition of the rosin base resin business of Momentive Specialty Chemicals, Inc. toestablish Lawter B.V., one of our consolidated subsidiaries, has increased our overseas sales. Lawter B.V.
is reported as a segment of the company.
Status of Business Segments(Resin & Tall Oil Products)
As digital technology continues to develop, demand for resins for printing inks has waned. The
publication of newspapers and books has decreased and the commercial printing industry remains stagnant,with a notable decrease in the production of planography ink, down 6% year-on-year. For these reasons,
there was a drop in our sales of resins, the raw material for printing inks.
With regard to paint resins, our sales are mainly aimed at the domestic market. With growth in housing
construction, the domestic production of paint increased by 3% year-on-year. Moreover, sales of building
paints and new products have remained strong on demand generated from the recovery of areas affected by
the Great East Japan Earthquake.
In the synthetic rubber emulsifier market, despite signs of recovery in the domestic automobile industry
and an increase in production, the domestic production of styrene-butadiene rubber used for tires decreased
by 2% year-on-year. Therefore, sales of synthetic rubber emulsifiers in this segment didn’t lead to recovery.
In addition, due to the depreciation of the yen and an increase in the price of tall oil, our main raw
material in the last half of the fiscal year, revenue declined substantially.
(Paper Chemicals)
During the current fiscal year, domestic cardboard production volume totalled 25.73 million tons, a 3%
decrease year-on-year.
This decrease continued for 10 months in a row from June 2012. In particular, the production volume ofprinting and publishing paper and paper for information processing significantly decreased by 5.3% yearon-year due to a decrease in demand resulting from the European debt crisis and an increase in imports.
Despite efforts to rationalize the production process and focus on promotion, sales and profit decreased in
the domestic market.
In the overseas market, although Chinese paper and cardboard paper production tended to increase,cardboard paper production was reduced, and competition among paper and paper chemical manufacturers
intensified. Regardless, our Chinese subsidiary still experienced a steady increase in sales, contributing toour profits.

-1-(Electronics Materials)
The performance of the Electronics device industry to which this segment is related remained the sameas the previous year for household electronic appliances such as audio-visual equipment and information
terminal devices. Sales of domestic audio-visual equipment such as flat panel TVs have fallen far below
the previous year. Automobile sales remained the same as the previous year, while an increase was seen in
the domestic market.
Under such circumstances, there has been an increase in sales of aluminium brazing materials used inheat exchangers for automobiles and novelty conductive paste. However, sales remained low due to theeffects of audio-visual equipment and information terminal devices.
(Lawter B.V.)
This segment is part of our resin and tall oil products business, whereby we manufacture and sell ink
resins and adhesive resins overseas.
Under the European debt crisis, sales of ink resins in this segment started to drop off as production
decreased not only in the European market, but also in China which depends on exports to Europe.
Sales of adhesive resins continued to experience strong demand in North America, South America, Asia,and Oceania, but still could not fully offset the large decline in Europe.
Consolidated Business Performance Trends(Millions of yen unless otherwise stated)
Category

68th Fiscal Year69th Fiscal Year70th Fiscal Year

71th Fiscal Year

(Fiscal year ended
March 2010)(Fiscal year ended
March 2011)(Fiscal year ended
March 2012)(Fiscal year ended
March 2013)

Net sales

33,49541,49571,53664,203

Ordinary income

1,597

2,766

2,159

1,422

Net income (loss)

952

1,337

1,012

216

Net income (loss) per
share (yen)

36.66

51.53

38.99

8.33

Total assets

45,94063,98363,42961,355

Net assets

28,31729,31329,581

29,823(Notes) 1. Net income (loss) per share is calculated based on the weighted average number of issued shares
during the fiscal year after deducting treasury stocks.

-2-

HARIMA CHEMICALS GROUP, INC. (formerly, Harima Chemicals, Inc.)and Consolidated Subsidiaries
Consolidated Balance Sheet
March 31, 2013

Millions of Yen
2013
2012

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 16)
Notes and accounts receivable (Note 16):
Trade notes
Trade accounts
Associated companies
Allowance for doubtful notes and accounts
Inventories (Note 5)
Deferred tax assets (Note 13)
Other current assets
Total current assets

¥

3,471

¥

5,218

Thousands of
U.S. Dollars(Note 1)
2013
$

2,107
16,376167(126 )
9,988
357
1,878

20,712
163,5622,243(1,308 )98,416
3,902
26,50833,00635,965350,941

PROPERTY, PLANT AND EQUIPMENT (Note 6):
Land (Note 7)
Buildings and structures (Note 7)
Machinery and equipment
Furniture and fixtures
Lease assets (Note 15)
Construction in progress
Total
Accumulated depreciation

10,66518,44322,163
3,814
621
559
56,265(33,767 )

10,46017,512
20,694
3,593
617
816
53,692(32,144 )

113,397
196,098
235,651
40,553
6,603
5,944
598,246(359,033 )Net property, plant and equipment

22,49821,548239,213

2,810
828
108
122
286
1,712
(15 )

2,747
824
178
229
382
1,571
(15 )

29,878
8,804
1,148
1,297
3,041
18,203(159 )

5,851

5,916

62,212INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 16)
Investments in and advances to associated companies
Goodwill
Other intangible assets
Deferred tax assets (Note 13)
Other assets
Allowance for doubtful accounts
Total investments and other assets

CURRENT LIABILITIES:
Short-term bank loans (Notes 8 and 16)
Current portion of long-term debt (Notes 8 and 16)
Notes and accounts payable (Note 16):
Trade notes
Trade accounts
Associated companies
Construction and other
Income taxes payable
Deferred tax liabilities (Note 13)
Other current liabilities

36,906

1,948
15,383211(123 )
9,256
367
2,493

¥ 61,355¥ 63,429

¥

8,663
1,800

¥

9,083
1,685

$

92,111
19,139

312
7,626
102
400
649
53
2,180

384
8,049
95
737
657
2
2,019

3,317
81,085
1,085
4,253
6,901
564
23,177

Total current liabilities

21,78522,711

231,632

LONG-TERM LIABILITIES:Long-term debt (Notes 8 and 16)
Deferred tax liabilities (Note 13)
Long-term deposits received (Note 16)
Liability for retirement benefits (Note 9)
Asset retirement obligations (Note 10)
Other long-term liabilities

6,667
531
935
1,332
46
236

8,064
435
1,065
1,322
45
206

70,888
5,646
9,942
14,163489
2508

Total long-term liabilities

9,747

11,137

103,636

10,013
9,744
9,742

10,013
9,744
9,890

106,465
103,604
103,583

(62 )

(62 )

(659 )

510(1,437 )
28,5101,313

221(1,561 )28,2451,336

5,423(15,279 )
303,137
13,961

29,82329,581

317,098¥ 61,355¥ 63,429$ 652,366

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 8, 15 and 17)
EQUITY (Note 11):
Common stock, authorized 59,500,000 shares; issued,
26,080,396 shares in 2013 and 2012
Capital surplus
Retained earnings
Treasury stock - at cost: 131,247 shares in 2013 and131,120 shares in 2012
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Total
Minority interests
Total equity

TOTAL

Millions of Yen
2013
2012

LIABILITIES AND EQUITY

Thousands of
U.S. Dollars(Note 1)
2013

TOTAL

$ 652,366

See notes to consolidated financial statements.

-3-

HARIMA CHEMICALS GROUP, INC. (formerly, Harima Chemicals, Inc.)and Consolidated Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2013

Millions of Yen
2012
2013
NET SALES

Thousands of
U.S. Dollars(Note 1)
2013

¥ 64,203¥ 71,536$ 682,648

51,85957,370551,399

12,344

14,166131,249

11,768

11,052

125,125

576

3,114

6,124

OTHER INCOME (EXPENSES) (Notes 4 and 6):
Interest and dividend income
Interest expense
Rental income
Foreign exchange gain (loss)
Equity in earnings of associated companies
Fire insurance proceeds
Other - net

97
(370)
117
933
23
57

102
(460 )
133(614 )
24
332(146 )

1,031(3,934)
1,244
9,920
245
607

Other income (expenses) - net

857(629 )

9,113

INCOME BEFORE INCOME TAXES AND MINORITY
INTERESTS

1,433

2,485

15,237

INCOME TAXES (Note 13):
Current
Deferred

1,138
124

1,194
172

12,100
1,318

1,262

1,366

13,418NET INCOME BEFORE MINORITY INTERESTS

171

1,119

1,819

MINORITY INTERESTS IN NET INCOME (LOSS)

(45)

107

(478)

COST OF SALES
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 12 and 14)
Operating income

Total income taxes

NET INCOME

¥

216

¥

1,012

Yen
PER SHARE OF COMMON STOCK (Notes 2.r and 19):
Net income
Cash dividends applicable to the year
See notes to consolidated financial statements.

-4-¥ 8.33
14.00

$

2,297

U.S. Dollars¥38.99
14.00

$0.09
0.15

HARIMA CHEMICALS GROUP, INC. (formerly, Harima Chemicals, Inc.)and Consolidated Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2013

Millions of Yen
2013
2012

Thousands of
U.S. Dollars(Note 1)2013

NET INCOME BEFORE MINORITY INTERESTS¥ 171¥ 1,119$ 1,819

OTHER COMPREHENSIVE INCOME (Note 18):
Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Share of other comprehensive income in associates
Total other comprehensive income

289
226
0
515

38
(384 )
0(346 )

3,073
2,402
0
5,475

773

$ 7,294¥656
117$6,688606

COMPREHENSIVE INCOME (Note 18)¥ 686

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO (Note18):
Owners of the parent
Minority interests

¥629
57

See notes to consolidated financial statements.

-5-¥

HARIMA CHEMICALS GROUP, INC. (formerly, Harima Chemicals, Inc.)and Consolidated Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2013
Thousands

BALANCE, APRIL 1, 2011
Net income
Cash dividends, ¥15.00 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2012
Net income
Cash dividends, ¥14.00 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2013

BALANCE, MARCH 31, 2012

Number of Sharesof Common Stock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

TreasuryStock25,950¥ 10,013¥ 9,744¥ 9,267¥ (62 )

Total

Minority
Interests

Total Equity¥ (1,165 )¥ 27,979¥ 1,334¥ 29,313

39(396 )

1,012(389 )(0 )(357 )

2

1,012(389 )(0 )(355 )

221(1,561 )28,245

1,336

29,581

289

124

216
(364 )
(0 )
413

(23 )

216
(364 )
(0 )
390

¥ 510

¥ (1,437 )¥ 28,510¥ 1,313¥ 29,823

Total

Minority
Interests

Total Equity$ (16,598 )$ 300,319$ 14,205$ 314,524

3,073

1,319

2,297
(3,871 )
(0 )
4,392

(244 )

2,297(3,871 )
(0 )
4,148

$ 5,423$ (15,279 )$ 303,137$ 13,961$ 317,098

¥ 182

1,012
(389 )(1 )25,949(0 )10,013

9,744

9,890

(62 )

216
(364 )(0 )25,949(0 )¥ 10,013¥ 9,744¥ 9,742¥ (62 )

CommonStockCapitalSurplusRetained
Earnings

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive
IncomeUnrealized
Foreign
Gain onCurrency
Treasury
Available-for-saleTranslation
Stock
Securities
Adjustments$ 106,465$ 103,604$ 105,157$ (659 )Net income
Cash dividends, $0.15 per share
Purchase of treasury stock
Net change in the year
BALANCE, MARCH 31, 2013

Millions of Yen
Accumulated Other Comprehensive
IncomeUnrealized
Foreign
Gain onCurrency
Available-for-saleTranslation
Securities
Adjustments$ 2,350

2,297(3,871 )(0 )$ 106,465$ 103,604$ 103,583$ (659 )See notes to consolidated financial statements-6-

HARIMA CHEMICALS GROUP, INC. (formerly, Harima Chemicals, Inc.)and Consolidated Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2013

Millions of Yen
2013
2012
OPERATING ACTIVITIES:
Income before income taxes and minority interests
Adjustments for:
Income taxes - paid
Depreciation and amortization
Loss on impairment of long-lived assets
Foreign exchange (gain) loss
Gain on sales of property, plant and equipment
Changes in assets and liabilities:
Decrease (increase) in trade notes and accounts receivable
Decrease in inventories(Decrease) in trade notes and account payable
Other - net
Total adjustments
Net cash provided by operating activities

Thousands of
U.S. Dollars(Note 1)2013

¥ 1,433¥ 2,485$ 15,237(1,102)
2,195
109
(925)
(22)

(925 )
2,014
14
596
(5 )

(11,717 )
23,3391,159(9,835)
(234)

1,721
1,326
(927)
(574)
1,801
3,234

(1,803 )148(1,182 )305(838 )
1,647

18,29914,099(9,856)(6,105)
19,14934,386INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales and redemption of investment securities
Other - net
Net cash used in investing activities(2,508)
59
(55)
(332)
654
10
(2,172)(1,967 )10(169 )(86 )
699(200 )(1,713 )(26,667 )
627(585)(3,530)6,954
107(23,094 )FINANCING ACTIVITIES:Net change in short-term bank loans
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Other - net
Net cash used in financing activities(864)(1,640)(364)(248)(3,116)(7,684 )9,973(2,186 )(389 )(189 )(475 )(9,187)(17,438 )(3,871)(2,635)(33,131 )307(199 )

3,264

NET DECREASE IN CASH AND CASH EQUIVALENTS(1,747)(740 )(18,575 )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

5,218

5,958

55,481¥ 3,471¥ 5,218$ 36,906

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON CASH
AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, END OF YEAR
See notes to consolidated financial statements.

-7-

HARIMA CHEMICALS GROUP, INC. (formerly, Harima Chemicals, Inc.)and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2013
1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set
forth in the Japanese Financial Instruments and Exchange Act and its related accounting regulations and inaccordance with accounting principles generally accepted in Japan ("Japanese GAAP"), which are different incertain respects as to the application and disclosure requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements have been
made to the consolidated financial statements issued domestically in order to present them in a form which ismore familiar to readers outside Japan. In addition, certain reclassifications have been made in the 2012
consolidated financial statements to conform to the classifications used in 2013.
The consolidated financial statements are stated in Japanese yen, the currency of the country in which HARIMA
CHEMICALS GROUP, INC. (the "Company") is incorporated and operates. The translations of Japanese yenamounts into U.S. dollar amounts are included solely for the convenience of readers outside Japan and have been
made at the rate of ¥94.05 to $1, the approximate rate of exchange at March 31, 2013. Such translations should
not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or
any other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation - The consolidated financial statements include the accounts of the Company and all its
subsidiaries (together, the "Group").
Under the control or influence concept, those companies in which the Company directly is able to exercise
control over operations are fully consolidated.
Investments in associated companies are accounted for by the equity method.
The excess of the cost of acquisition over the fair value of the net assets of an acquired subsidiary at the dateof acquisition is being amortized over a period not exceeding 20 years.
All significant intercompany balances and transactions have been eliminated in consolidation. All material
unrealized profit included in assets resulting from transactions within the Group is also eliminated.

-8-

b.

Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial
Statements - In May 2006, the Accounting Standards Board of Japan (the "ASBJ") issued ASBJ Practical
Issues Task Force (PITF) No. 18, "Practical Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial Statements." PITF No. 18 prescribes that theaccounting policies and procedures applied to a parent company and its subsidiaries for similar transactions
and events under similar circumstances should in principle be unified for the preparation of theconsolidated financial statements. However, financial statements prepared by foreign subsidiaries inaccordance with either International Financial Reporting Standards or the generally accepted accounting
principles in the United States of America tentatively may be used for the consolidation process, except for
the following items which should be adjusted in the consolidation process so that net income is accounted
for in accordance with Japanese GAAP unless they are not material: (a) amortization of goodwill; (b)scheduled amortization of actuarial gain or loss of pensions that has been directly recorded in equity; (c)expensing capitalized development costs of R&D; (d) cancellation of the fair value model accounting forproperty, plant, and equipment and investment properties and incorporation of the cost model accounting;and (e) exclusion of minority interests from net income, if contained in net income.

c.

Cash Equivalents - Cash equivalents are short-term investments that are readily convertible into cash andthat are exposed to insignificant risk of changes in value. Cash equivalents include time deposits andcertificate of deposits, all of which mature or become due within three months of the date of acquisition.

d.

Inventories - Inventories are principally stated at the lower of cost, determined by the moving-averagemethod, or net selling value.
Certain consolidated foreign subsidiaries are stated at the lower of cost, determined by the first-in, first-out
method, or net selling value.

e.

Investment Securities - Investment securities are classified and accounted for, as follows: Marketableavailable-for-sale securities are reported at fair value, with unrealized gains and losses, net of applicabletaxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities are reduced to net realizable value by
a charge to income.

f.

Property, Plant and Equipment - Property, plant and equipment are stated at cost. Depreciation ofproperty, plant and equipment of the Company and its consolidated domestic subsidiaries is principally
computed by the declining-balance method, while the straight-line method is applied to buildings acquired
after April 1, 1998, and certain domestic subsidiaries and foreign subsidiaries apply the straight-line
method, using rates based on the estimated useful lives of the assets. The range of useful lives is from 5 to
50 years for buildings and from 4 to 17 years for machinery and equipment.
In accordance with a revision of corporate tax law, the Company and certain domestic subsidiaries havechanged the method of depreciation based on the revised corporate tax law and applied the new method toproperty, plant and equipment acquired on and after April 1, 2012. This change had the effect of increasing
operating income and income before income taxes and minority interests for the year ended March 31, 2013,by ¥44 million ($468 thousand).

-9-

g.

Long-Lived Assets - The Group reviews its long-lived assets for impairment whenever events or changes incircumstance indicate the carrying amount of an asset or asset group may not be recoverable. An
impairment loss is recognized if the carrying amount of an asset or asset group exceeds the sum of theundiscounted future cash flows expected to result from the continued use and eventual disposition of theasset or asset group. The impairment loss would be measured as the amount by which the carrying amountof the asset exceeds its recoverable amount, which is the higher of the discounted cash flows from thecontinued use and eventual disposition of the asset or the net selling price at disposition.

h.

Other Assets - Amortization of capitalized software costs is computed using the straight-line method over 5
years, the estimated useful life of the assets. Amortization of customer lists costs is computed using thestraight-line method over 5 years, the estimated economic life of the assets.

i.

Retirement Benefits - The Company and certain domestic consolidated subsidiaries have a funded defined
benefit pension plan, defined contribution pension plan and severance lump-sum payment plan covering
substantially all of its employees. Certain foreign subsidiaries have adopted funded defined benefit plansand defined contribution pension plans.
The Company and certain domestic subsidiaries have adopted an accounting standard for employees'
retirement benefits and accounted for the liability for retirement benefits based on the projected benefit
obligations and plan assets at the balance sheet date.
Retirement allowances for directors and Audit & Supervisory Board members are recorded as a liability at
the amount that would be required if all directors and Audit & Supervisory Board members retired at eachbalance sheet date.

j.

Asset Retirement Obligations - In March 2008, the ASBJ published the accounting standard for asset
retirement obligations, ASBJ Statement No. 18 "Accounting Standard for Asset Retirement Obligations"and ASBJ Guidance No. 21 "Guidance on Accounting Standard for Asset Retirement Obligations." Under
this accounting standard, an asset retirement obligation is defined as a legal obligation imposed either by
law or contract that results from the acquisition, construction, development and the normal operation of atangible fixed asset and is associated with the retirement of such tangible fixed asset. The asset retirement
obligation is recognized as the sum of the discounted cash flows required for the future asset retirement andis recorded in the period in which the obligation is incurred if a reasonable estimate can be made. If areasonable estimate of the asset retirement obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized when a reasonable estimate of the asset retirement
obligation can be made. Upon initial recognition of a liability for an asset retirement obligation, an asset
retirement cost is capitalized by increasing the carrying amount of the related fixed asset by the amount of
the liability. The asset retirement cost is subsequently allocated to expense through depreciation over theremaining useful life of the asset. Over time, the liability is accreted to its present value each period. Any
subsequent revisions to the timing or the amount of the original estimate of undiscounted cash flows arereflected as an adjustment to the carrying amount of the liability and the capitalized amount of the related
asset retirement cost.

k.

Research and Development Costs - Research and development costs are charged to income as incurred.

l.

Leases - In March 2007, the ASBJ issued ASBJ Statement No. 13, "Accounting Standard for Lease
Transactions," which revised the previous accounting standard for lease transactions. The revised
accounting standard for lease transactions was effective for fiscal years beginning on or after April 1, 2008.

- 10 -

Under the previous accounting standard, finance leases that were deemed to transfer ownership of theleased property to the lessee were capitalized. However, other finance leases were permitted to beaccounted for as operating lease transactions if certain "as if capitalized" information was disclosed in thenote to the lessee's financial statements. The revised accounting standard requires that all finance leasetransactions be capitalized by recognizing lease assets and lease obligations in the balance sheet.
The Company applied the revised accounting standard effective April 1, 2008. In addition, the Company
accounted for leases which existed at the transition date and do not transfer ownership of the leased
property to the lessee as acquisition cost of lease assets measured at the amount of obligation under financeleases less interest expense at the transition date.
All other leases are accounted for as operating leases.
m. Bonuses to Directors and Audit & Supervisory Board Members - Bonuses to directors and Audit &Supervisory Board members are accrued at the end of the year to which such bonuses are attributable.
n.

Income Taxes - The provision for income taxes is computed based on the pretax income included in the
consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of assets and liabilities. Deferred taxes are measured by applying currently
enacted tax laws to the temporary differences.

o.

Foreign Currency Transactions - All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rates at the balance sheet
date. The foreign exchange gains and losses from translation are recognized in the consolidated statementof income to the extent that they are not hedged by forward exchange contracts.

p.

Foreign Currency Financial Statements - The balance sheet accounts of the consolidated foreignsubsidiaries are translated into Japanese yen at the current exchange rate as of the balance sheet date except
for equity, which is translated at the historical rate. Differences arising from such translation are shown as"Foreign currency translation adjustments" under accumulated other comprehensive income in a separate
component of equity. Revenue and expense accounts of consolidated foreign subsidiaries are translated
into yen at the average exchange rate.

q.

Derivative Financial Instruments - The Group uses derivative financial instruments to manage its
exposures to fluctuations in interest rates. Interest rate swaps are utilized by the Group to reduce interest
rate risks. The Group does not enter into derivatives for trading or speculative purposes.
Derivative financial instruments are classified and accounted for as follows: (1) all derivatives arerecognized as either assets or liabilities and measured at fair value, and gains or losses on derivativetransactions are recognized in the consolidated statement of income and (2) for derivatives used for hedging
purposes, if such derivatives qualify for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains or losses on derivatives are deferred until
maturity of the hedged transactions.
Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are notremeasured at market value but the differential paid or received under the swap agreements is recognized
and included in interest expense or income.

r.

Per Share Information - Basic net income per share is computed by dividing net income available tocommon shareholders by the weighted-average number of common shares outstanding for the period.

- 11 -

Diluted net income per share is not presented as the effect of including potential common shares isanti-dilutive.
Cash dividends per share presented in the accompanying consolidated statement of income are dividends
applicable to the respective years including dividends to be paid after the end of the year.
s.

Accounting Changes and Error Corrections - In December 2009, the ASBJ issued ASBJ Statement No.
24, "Accounting Standard for Accounting Changes and Error Corrections" and ASBJ Guidance No. 24,"Guidance on Accounting Standard for Accounting Changes and Error Corrections." Accounting
treatments under this standard and guidance are as follows: (1) Changes in Accounting Policies - When a
new accounting policy is applied following revision of an accounting standard, the new policy is applied
retrospectively unless the revised accounting standard includes specific transitional provisions, in whichcase the entity shall comply with the specific transitional provisions. (2) Changes in Presentation - Whenthe presentation of financial statements is changed, prior-period financial statements are reclassified inaccordance with the new presentation. (3) Changes in Accounting Estimates - A change in an accounting
estimate is accounted for in the period of the change if the change affects that period only, and is accounted
for prospectively if the change affects both the period of the change and future periods. (4) Corrections ofPrior-Period Errors - When an error in prior-period financial statements is discovered, those statements arerestated.

t.

New Accounting Pronouncements
Accounting Standard for Retirement Benefits - On May 17, 2012, the ASBJ issued ASBJ Statement No.
26, "Accounting Standard for Retirement Benefits" and ASBJ Guidance No. 25, "Guidance on AccountingStandard for Retirement Benefits," which replaced the Accounting Standard for Retirement Benefits that
had been issued by the Business Accounting Council in 1998 with an effective date of April 1, 2000, andthe other related practical guidance, and followed by partial amendments from time to time through 2009.
Major changes are as follows:(a) Treatment in the balance sheet
Under the current requirements, actuarial gains and losses and past service costs that are yet to berecognized in profit or loss are not recognized in the balance sheet, and the difference between
retirement benefit obligations and plan assets (hereinafter, "deficit or surplus"), adjusted by suchunrecognized amounts, is recognized as a liability or asset.
Under the revised accounting standard, actuarial gains and losses and past service costs that are yet tobe recognized in profit or loss shall be recognized within equity (accumulated other comprehensive
income), after adjusting for tax effects, and any resulting deficit or surplus shall be recognized as aliability (liability for retirement benefits) or asset (asset for retirement benefits).
(b) Treatment in the statement of income and the statement of comprehensive income
The revised accounting standard does not change how to recognize actuarial gains and losses and past
service costs in profit or loss. Those amounts would be recognized in profit or loss over a certain
period no longer than the expected average remaining working lives of the employees. However,actuarial gains and losses and past service costs that arose in the current period and have not yet beenrecognized in profit or loss shall be included in other comprehensive income and actuarial gains andlosses and past service costs that were recognized in other comprehensive income in prior periods andthen recognized in profit or loss in the current period shall be treated as reclassification adjustments.

- 12 -

(c) Amendments relating to the method of attributing expected benefit to periods and relating to thediscount rate and expected future salary increases
The revised accounting standard also made certain amendments relating to the method of attributing
expected benefit to periods and relating to the discount rate and expected future salary increases.
This accounting standard and the guidance for (a) and (b) above are effective for the end of annual periods
beginning on or after April 1, 2013, and for (c) above are effective for the beginning of annual periods
beginning on or after April 1, 2014, or for the beginning of annual periods beginning on or after April 1,
2015, subject to certain disclosure in March 2015, both with earlier application being permitted from the
beginning of annual periods beginning on or after April 1, 2013. However, no retrospective application ofthis accounting standard to consolidated financial statements in prior periods is required.
The Company expects to apply the revised accounting standard for (a) and (b) above from the end of theannual period beginning on April 1, 2013, and for (c) above from the beginning of the annual period
beginning on April 1, 2014, and is in the process of measuring the effects of applying the revised
accounting standard in future applicable periods.
3.

BUSINESS COMBINATION
Company split for the transition to a holding company structure
The Company spun off all of its business into a new wholly owned subsidiary named Harima Chemicals, Inc.
and effected a transition to a holding company structure at October 1, 2012. The Company changed its name to
HARIMA CHEMICALS GROUP, INC. from the former Harima Chemicals, Inc. on the same day and maintains
its listing as a holding company. Harima Chemicals, Inc. issued 170,000 shares of common stock and all of themwere allocated to the Company.
The business which was spun off consists of Resin & Tall Oil Products business, Paper Chemicals business andElectronics Materials business.
The Company carried out the company split in order to separate management and administration functions frombusiness functions and initiate a global strategy to improve overall group efficiency as a holding company.
The Company accounted for this company split as transactions under common control in accordance with
"Accounting Standard for Business Combinations" (ASBJ Statement No. 21, December 26, 2008), "AccountingStandard for Business Divestitures" (ASBJ Statement No. 7, December 26, 2008) and "Guidance for AccountingStandard for Business Combinations and Business Divestitures" (ASBJ Guidance No. 10, December 26, 2008).
Assets and liabilities transferred to Harima Chemicals, Inc., from the Company are as follows:
Millions ofYen

Thousands of
U.S. Dollars

Current assets
Noncurrent assets¥ 14,423
343$ 153,355
3,647

Total assets¥ 14,766$ 157,002

Current liabilities
Long-term liabilities¥ (5,524 )(743 )$ (58,735 )(7,900)Total liabilities¥ (6,267 )$ (66,635 )- 13 -

4.

INVESTMENT SECURITIESInvestment securities as of March 31, 2013 and 2012, consisted of the following:Thousands of
U.S. Dollars
2013

Millions of Yen
2012
2013
Non-current:
Equity securities
Trust fund investments and other¥ 2,424386¥ 2,063684$ 25,774
4,104

Total

¥ 2,810¥ 2,747$ 29,878

The costs and aggregate fair values of investment securities at March 31, 2013 and 2012, were as follows:

Cost

March 31, 2013
Securities classified as:
Available-for-sale:
Equity securities
Debt securities

Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value¥ 1,676
387

¥ 868
7

¥ 153
8

¥ 2,391386¥ 1,671
703

¥ 584
4

¥ 226
23

¥ 2,029684

March 31, 2012
Securities classified as:
Available-for-sale:
Equity securities
Debt securities

Cost

March 31, 2013
Securities classified as:
Available-for-sale:
Equity securities
Debt securities$ 17,820
4,115

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
LossesFair
Value$ 9,22974$ 25,423
4,104$ 1,626
85

Carrying amounts of available-for-sale securities whose fair value is not readily determinable as of March 31,
2013 and 2012, were as follows:
Millions of Yen
2012
2013
Available-for-sale:
Equity securities
Other

¥ 33
0

- 14 -¥ 34
0

Thousands of
U.S. Dollars
2013
$ 351
0

The information for available-for-sale securities which were sold during the years ended March 31, 2013 and2012, was as follows:

March 31, 2013

Proceeds

Millions of Yen
Realized
Gains

Available-for-sale:
Equity securities
Debt securities

¥ 13
641

¥ 2
9

¥ -

Total

¥ 654

¥ 11

¥ -

Available-for-sale:
Equity securities
Debt securities

¥ 29
670

¥ 9
1

¥ 1

Total

¥ 699

¥ 10

¥ 1

Realized
LossesMarch 31, 2012

Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
LossesMarch 31, 2013
Available-for-sale:
Equity securities
Debt securities

$

Total

138
6,816

$ 21
96

$ -

$ 6,954

$ 117

$ -

The impairment loss on available-for-sale equity securities for the year ended March 31, 2012, was ¥1 million
included in OTHER EXPENSES other - net in the consolidated statements of income.
5.

INVENTORIESInventories at March 31, 2013 and 2012, consisted of the following:
Millions of Yen
2012
2013

6.

Thousands of
U.S. Dollars
2013

Finished products
Work in process
Raw materials and supplies¥ 4,656357
4,243¥ 4,128393
5,467$ 49,506
3,796
45,114

Total¥ 9,256¥ 9,988$ 98,416

LONG-LIVED ASSETSThe Group recognized an impairment loss of ¥109 million ($1,159 thousand), which is included in OTHER
EXPENSES other - net in the consolidated statement of income, for the year ended March 31, 2013. The
impairment loss was mainly recognized for the buildings and structures and machinery and equipment inTokushima plant in Japan. This impairment loss was recognized since the recoverable amounts of the assets
were lower than the carrying amounts of the assets. The recoverable amounts of the assets were measured by thenet selling price at disposal.

- 15 -

The Group recognized an impairment loss of ¥14 million, which is included in OTHER EXPENSES other - net
in the consolidated statement of income, for the year ended March 31, 2012. The impairment loss was mainly
recognized for the machinery and equipment in Kakogawa plant in Japan. This impairment loss was recognizedsince the recoverable amounts of the assets were lower than the carrying amounts of the assets. The recoverable
amounts of the assets were measured by the net selling price at disposal.
7.

INVESTMENT PROPERTYIn November 2008, the ASBJ issued ASBJ Statement No. 20 "Accounting Standard for Investment Property and
Related Disclosures" and issued ASBJ Guidance No. 23 "Guidance on Accounting Standard for Investment
Property and Related Disclosures."
The Group owns certain rental properties such as office buildings and land. The net of rental income andoperating expenses for those rental properties for the fiscal years ended March 31, 2013 and 2012, were ¥121
million ($1,287 thousand) and ¥132 million, respectively.
In addition, the carrying amounts, changes in such balances and market prices of such properties are as follows.
Millions of Yen
Carrying AmountMarch 31,
April 1, 2012
Decrease
2013¥3,450¥42¥3,408Millions of Yen
Carrying AmountMarch 31,
April 1, 2011
Decrease2012¥3,466¥16¥3,450Thousands of U.S. Dollars
Carrying AmountMarch 31,
April 1, 2012
Decrease
2013$36,683$447$36,236

Fair Value
March 31,
2013
¥4,298Fair Value
March 31,
2012
¥4,380Fair Value
March 31,2013
$45,699

Notes:1)

Carrying amount recognized in the consolidated balance sheets is net of accumulated depreciation andaccumulated impairment losses, if any.

2)

Increase during the fiscal year ended March 31, 2013, primarily represents the acquisition of certain
properties of ¥12 million ($128 thousand), and decrease primarily represents the depreciation of ¥45
million ($478 thousand). Increase during the fiscal year ended March 31, 2012, primarily represents
the acquisition of certain properties of ¥30 million, and decrease primarily represents the depreciationof ¥46 million.

3)

Fair value of properties is measured by the Group in accordance with its Real-Estate Appraisal
Standard.

- 16 -

8.

SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans at March 31, 2013 and 2012, consisted of notes to banks and bank overdrafts. The
average interest rates applicable to the short-term bank loans as of March 31, 2013 and 2012, were 2.1% and2.4%, respectively.
Long-term debt at March 31, 2013 and 2012, consisted of the following:Thousands of
U.S. Dollars
2013

Millions of Yen
2012
2013
Unsecured loans from banks and other financial
institutions, due serially to 2016 with interest rates
ranging from 1.6% to 1.9% (1.7% to 6.7% in 2012)
Obligations under finance leases
Total
Less current portion¥ 7,752715
8,467(1,800)¥ 9,116633
9,749(1,685 )$ 82,425
7,602
90,027(19,139 )Long-term debt, less current portion¥ 6,667¥ 8,064$ 70,888

Annual maturities of long-term debt, at March 31, 2013, for the next five years and thereafter were as follows:Year Ending March 31

Millions ofYen

Thousands of
U.S. Dollars

2014
2015
2016
2017
2018
2019 and thereafter¥ 1,800
1,665
1,623
2,869
38
472

$ 19,139
17,703
17,25730,505
404
5,019

Total

¥ 8,467$ 90,027

Certain loans from banks are subject to the following financial covenants:
1)

Total equity shall be more than ¥22,000 million ($233,918 thousand) for the first half of the fiscal year
ended March 31, 2013, and for the fiscal year ended March 31, 2013, on a consolidated basis.

2)

Total equity shall be more than ¥19,900 million ($211,590 thousand) for the first half of the fiscal year
ended March 31, 2013, and for the fiscal year ended March 31, 2013, on a nonconsolidated basis. Total
equity for the fiscal year ended March 31, 2013, on a nonconsolidated basis is ¥27,922 million ($296,885
thousand).

3)

Ordinary income shall not be a loss for the fiscal years ended March 31, 2013 and 2012, both on aconsolidated and nonconsolidated basis.

As is customary in Japan, the Company maintains substantial deposit balances with banks with which it hasborrowings. Such deposit balances are not legally or contractually restricted as to withdrawal.

- 17 -

As is customary in Japan, collateral must be provided if requested by the lending banks and certain banks havethe right to offset cash deposited with them against any bank loan or obligation that becomes due and, in case ofdefault and certain other specified events, against all other debt payable to the banks concerned. The Company
has never received any such request.
The outstanding balance of the commitment as of March 31, 2013, was as follows:
Millions ofYen

Thousands of
U.S. Dollars

Total committed line of credit
Executed amount¥ 10,000
3,326$ 106,326
35,364Unexecuted amount

¥

$

6,674

70,962

The above agreements are subject to the following financial covenants:

9.

1)

Total equity shall be more than ¥22,000 million ($233,918 thousand) for the first half of the fiscal year
ended March 31, 2013, and for the fiscal year ended March 31, 2013, on a consolidated basis.

2)

Total equity shall be more than ¥19,900 million ($211,590 thousand) for the first half of the fiscal year
ended March 31, 2013, and for the fiscal year ended March 31, 2013, on a nonconsolidated basis. Total
equity for the fiscal year ended March 31, 2013, on a nonconsolidated basis is ¥27,922 million ($296,885
thousand).

3)

Ordinary income shall not be a loss for the fiscal years ended March 31, 2013 and 2012, both on aconsolidated and nonconsolidated basis.

RETIREMENT AND PENSION PLANS
The Group has severance payment plans for employees, directors and Audit & Supervisory Board members.
Under most circumstances, employees terminating their employment are entitled to retirement benefits
determined based on the rate of pay at the time of termination, years of service and certain other factors. Suchretirement benefits are made in the form of a lump-sum severance payment or annuity payments from a trustee.
Employees are entitled to larger payments if the termination is involuntary, by retirement at the mandatory
retirement age or by death.
The liability for retirement benefits at March 31, 2013 and 2012, for directors and Audit & Supervisory Board
members is ¥464 million ($4,934 thousand) and ¥435 million, respectively, and is included in liability for
retirement benefits in the consolidated balance sheets. The retirement benefits for directors and Audit &Supervisory Board members are paid subject to the approval of the shareholders in accordance with theCompanies Act of Japan (the "Companies Act").
The liability for employees' retirement benefits at March 31, 2013 and 2012, consisted of the following:
Millions of Yen
2012
2013

Thousands of
U.S. Dollars
2013

Projected benefit obligation
Fair value of plan assets
Unrecognized actuarial loss

¥ 2,805(1,391)(546)¥ 2,495(1,255 )(353 )$ 29,825(14,790 )(5,806)Net liability

¥

¥

$

- 18 -

868

887

9,229

The components of net periodic retirement benefit costs for the years ended March 31, 2013 and 2012, were as
follows:
Millions of Yen
2012
2013

Thousands of
U.S. Dollars
2013

Service cost
Interest cost
Recognized actuarial loss
Net periodic retirement benefit costs
Payments to defined contribution pension plan and other

¥ 288
49
55
392
122

¥ 234
47
63
344
107

$ 3,062
521
585
4,168
1,297

Total

¥ 514

¥ 451

$ 5,465

Assumptions used for the years ended March 31, 2013 and 2012, are set forth as follows:
2012

2013
Discount rate
Expected rate of return on plan assets
Allocation method of the retirement benefits
expected to be paid at the retirement date
Amortization period of prior service cost
Recognition period of actuarial gain or loss
10.

1.0%
0.0%
Straight-line method
based on years ofservice1 year14 years

2.0%
0.0%
Straight-line method
based on years ofservice1 year14 years

ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2013 and 2012, were as follows:
Millions of Yen
2012
2013
Balance at beginning of year
Reconciliation associated with passage of time
Balance at end of year

11.

¥ 45
1
46

¥ 45
0
45

Thousands of
U.S. Dollars
2013
$ 478
11
489

EQUITYJapanese companies are subject to the Companies Act. The significant provisions in the Companies Act that
affect financial and accounting matters are summarized below:a.

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in addition to theyear-end dividend upon resolution at the shareholders meeting. For companies that meet certain criteriasuch as (1) having the Board of Directors, (2) having independent auditors, (3) having an Audit &Supervisory Board, and (4) the term of service of the directors is prescribed as one year rather than two
years of normal term by its articles of incorporation, the Board of Directors may declare dividends (except
for dividends in kind) at any time during the fiscal year if the company has prescribed so in its articles ofincorporation. The Company meets all the above criteria.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) to shareholders
subject to a certain limitation and additional requirements.

- 19 -

Semiannual interim dividends may also be paid once a year upon resolution by the Board of Directors if thearticles of incorporation of the company so stipulate. The Companies Act provides certain limitations on
the amounts available for dividends or the purchase of treasury stock. The limitation is defined as theamount available for distribution to the shareholders, but the amount of net assets after dividends must be
maintained at no less than ¥3 million.
b.

Increases/Decreases and Transfer of Common Stock, Reserve and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated as a legal
reserve (a component of retained earnings) or as additional paid-in capital (a component of capital surplus)
depending on the equity account charged upon the payment of such dividends until the aggregate amount oflegal reserve and additional paid-in capital equals 25% of the common stock. Under the Companies Act,the total amount of additional paid-in capital and legal reserve may be reversed without limitation. The
Companies Act also provides that common stock, legal reserve, additional paid-in capital, other capitalsurplus and retained earnings can be transferred among the accounts under certain conditions upon
resolution of the shareholders.

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose of such treasury
stock by resolution of the Board of Directors. The amount of treasury stock purchased cannot exceed theamount available for distribution to the shareholders which is determined by specific formula. Under theCompanies Act, stock acquisition rights are now presented as a separate component of equity. The
Companies Act also provides that companies can purchase both treasury stock acquisition rights andtreasury stock. Such treasury stock acquisition rights are presented as a separate component of equity or
deducted directly from stock acquisition rights.

12.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the years ended March 31, 2013 and 2012, principally consistedof the following:
Millions of Yen
2012
2013
Employees' salaries and bonuses
Net periodic retirement benefit
Transport
Depreciation
RentalResearch and development
Amortization of goodwill

13.

¥ 2,473
167
2,318
566
155
1,764
89

¥ 2,480
175
2,217
437
242
1,764
80

Thousands of
U.S. Dollars
2013$ 26,295
1,776
24,646
6,018
1,648
18,756946

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes which, in theaggregate, resulted in normal effective statutory tax rates of approximately 38.0% for the year ended March 31,
2013, and 40.6% for the year ended March 31, 2012.

- 20 -

The tax effects of significant temporary differences and tax loss carryforwards which resulted in deferred tax
assets and liabilities at March 31, 2013 and 2012, are as follows:
Millions of Yen
2012
2013
Deferred tax assets:
Tax loss carryforwards
Impairment loss on long-lived assets
Loss on revaluation of investment securities
Retirement benefits to directors and Audit &Supervisory Board members
Property, plant and equipment
Unrealized loss on available-for-sale securities
Other
Less valuation allowance
Total
Deferred tax liabilities:
Reserve for deferred gains on sales of property, plantand equipment
Unrealized gain on available-for-sale securities
Other
Total
Net deferred tax assets

Thousands of
U.S. Dollars
2013¥ 1,458
1,360
248¥ 1,211
1,359
248$ 15,502
14,460
2,637

166
97
58
694
(3,645)
¥
436

158
97
89
392
(2,965 )
¥
589

1,765
1,031
617
7,379
(38,756 )$ 4,635

¥

¥

$

¥

79
194
94
367

¥

69

¥

82
108
97
287

$

840
2,063
999
3,902

¥

302

$

733

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate reflected in theaccompanying consolidated statement of income for the year ended March 31, 2013, with corresponding figuresfor 2012, is as follows:
2013

2012

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Inhabitants' per capita levy
Difference of income tax rates applicable to income in certain foreigncountries
Adjustment of deferred tax assets and liabilities at end of period due tochange in tax rates
Increase of valuation allowance
Tax credit
Other - net

38.0 %
12.0
2.0

40.6 %
10.6
1.4

5.7

(1.1 )

38.9(9.3 )
0.8

3.0(4.5 )
5.0

Actual effective tax rate

88.1 %

55.0 %On December 2, 2011, new tax reform laws were enacted in Japan, which changed the normal effective statutory
tax rate from approximately 40.6% to 38.0% effective for the fiscal years beginning on or after April 1, 2012
through March 31, 2015, and to 35.6% afterwards.
14.

RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥1,764 million ($18,756 thousand) and ¥1,764 million
for the years ended March 31, 2013 and 2012, respectively.

- 21 -

15.

LEASESThe Group leases certain structures, machinery and equipment and other assets.
Total lease expenses included for the years ended March 31, 2013 and 2012, were ¥157 million ($1,669
thousand) and ¥128 million, respectively.

16.

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly bank loans based on its capital financing plan. Short-termbank loans are used to fund the Group's ongoing operations. Derivatives are used, not for speculative
purposes, but to manage exposure to financial risks as described in (2) below.
(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables such as trade notes and trade accounts are exposed to customer credit risk. Payment terms of
payables, such as trade notes and trade accounts, are primarily less than one year. Payment in foreign
currencies is exposed to the market risk of fluctuation in foreign currency exchange rates. Investment
securities are exposed to the risk of market price fluctuations. Short-term bank loans and long-term debt are
related to ongoing operations and working capital. Although a part of such bank loans are exposed tomarket risks from changes in variable interest rates, those risks are mitigated by using derivatives of interest
rate swaps. Long-term deposits received are mainly related to entry deposits for a golf course and are
exposed to liquidity risk.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service debt
according to the contractual terms. The Group manages its credit risk from receivables on the basis ofinternal guidelines, which include monitoring of payment term and balances of major customers by eachbusiness administration department to identify the default risk of customers at an early stage.
The counterparties to the Group's derivative contracts are limited to major international financial
institutions to reduce credit risk.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as of March 31,
2013.
Market risk management (foreign exchange risk and interest rate risk)
Interest-rate swaps are used to manage exposure to market risks from changes in interest rates of loans
payable.
Investment securities are managed by monitoring market values and the financial position of issuers on aregular basis.
Derivative transactions entered into by the Group have been made in accordance with internal policies that
regulate the authorization and credit limit amount.

- 22 -

Liquidity risk management
Liquidity risk comprises the risk that the Group cannot meet its contractual obligations in full on theirmaturity dates. The Group manages its liquidity risk by holding adequate volumes of liquid assets at thelevel of one month's sales volume, along with adequate financial planning by the corporate treasury
department.
(4) Fair Value of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted price is notavailable, another rational valuation technique is used instead.
Fair Value of Financial Instruments
Carrying amounts, fair values and the differences between carrying amounts and fair values as of March 31,
2013 and 2012, are as follows. The accounts deemed to be extremely difficult to calculate the fair values
are not included in the following:
Millions of Yen
Carrying
AmountFair Value

Cash and cash equivalents
Notes and accounts receivable
Investment securities

¥

¥

Total

March 31, 2013

3,471
17,542
2,777

Unrealized
Gain/(Loss)

3,471
17,542
2,777¥-¥ 23,790¥ 23,790¥-

Notes and accounts payable
Short-term bank loans
Current portion of long-term debt (excluding
obligations under finance leases)
Long-term debt (excluding obligations underfinance leases)
Long-term deposits received

¥

¥

¥

-

8,440
8,663

8,440
8,663

1,737

1,737

-

6,015
935

6,020
818

(5 )
117

Total

¥ 25,790¥ 25,678¥ 112

March 31, 2012

Carrying
AmountFair Value

Cash and cash equivalents
Notes and accounts receivable
Investment securities

¥

¥

Total

Millions of Yen

5,218
18,6502,713¥-¥ 26,581¥ 26,581¥-

Notes and accounts payable
Short-term bank loans
Current portion of long-term debt (excluding
obligations under finance leases)
Long-term debt (excluding obligations underfinance leases)
Long-term deposits received

¥

¥

¥

-

Total

- 23 -

5,218
18,650
2,713

Unrealized
Gain/(Loss)

9,265
9,083

9,265
9,083

1,634

1,634

-

7,482
1,065

7,489
864

(7 )
201

¥ 28,529¥ 28,335¥ 194

Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value
Gain/(Loss)

March 31, 2013
Cash and cash equivalents
Notes and accounts receivable
Investment securities

$

Total

36,906
186,517
29,52736,906
186,517
29,527$-$ 252,950$ 252,950$-

Notes and accounts payable
Short-term bank loans
Current portion of long-term debt (excluding
obligations under finance leases)
Long-term debt (excluding obligations underfinance leases)
Long-term deposits received

$

$

$

-

Total

89,74092,111$89,74092,111

18,46918,469-63,955
9,942

64,009
8,698

(54)
1,244

$ 274,217$ 273,027$ 1,190

Cash and Cash Equivalents and Notes and Accounts Receivable
The carrying values of cash and cash equivalents and notes and accounts receivable approximate fair value
because of their short maturities.
Investment Securities
The fair values of marketable and investment securities are measured at the quoted market price of the stock
exchange for the equity instruments, and at the quoted price obtained from the financial institution forcertain debt instruments. The fair value information for investment securities by classification is includedin Note 4.
Notes and Accounts Payable, Short-Term Bank Loans and Current Portion of Long-Term Debt
The carrying values of notes and accounts payable, short-term bank loans and current portion of long-term
debt approximate fair value because of their short maturities.
Long-Term Debt
The fair values of long-term debt are determined by discounting the cash flows related to the debt at theGroup's assumed corporate borrowing rate for the fiscal year ended March 31, 2013.
Long-Term Deposits Received
The fair values of long-term deposits received are determined by discounting the future cash flows
estimable from the past refund experience and by the estimated interest rate reflecting assumed refund
period and credit risk.
Derivatives
The fair value information for derivatives is included in Note 17.

- 24 -

(5) Maturity Analysis for Financial Assets with Contractual Maturities

Due inOne Year or
Less

March 31, 2013
Cash and cash equivalents
Notes and accounts receivable
Investment securities
Available-for-sale securities with
contractual maturities
Total

Cash and cash equivalents
Notes and accounts receivable
Investment securities
Available-for-sale securities with
contractual maturities
Total

¥ -

¥ -

-

-

-

386

¥ 21,013

¥ -

¥ -

¥ 386

¥

Cash and cash equivalents
Notes and accounts receivable
Investment securities
Available-for-sale securities with
contractual maturities
Total

¥

Millions of Yen
Due after
Due after
One Year
Five Years
through Five through Ten
Years
Years
-

Due after
Ten Years

¥ -

-

-

106

578

¥ 23,868

¥ -

¥ 106

¥ 578

$

¥

-

5,218
18,650Due inOne Year or
Less

March 31, 2013

Due after
Ten Years

3,471
17,542Due inOne Year or
Less

March 31, 201217.

¥

Millions of Yen
Due after
Due after
One Year
Five Years
through Five through Ten
Years
Years

Thousands of U.S. Dollars
Due after
Due after
One Year
Five Years
through Five through Ten
Years
Years

¥

-

Due after
Ten Years

36,906
186,517

$ -

$ -

$

-

-

-

-

4,104

$ 223,423

$ -

$ -

$ 4,104

DERIVATIVESThe Group also enters into interest rate swap contracts to manage its interest rate exposures on certain liabilities.
All derivative transactions are entered into to hedge interest exposures incorporated within the Group's business.
Accordingly, market risk in these derivatives is basically offset by opposite movements in the value of hedged
liabilities.
Because the counterparties to these derivatives are limited to major international financial institutions, the Group
does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal policies which
regulate the authorization and credit limit amount.

- 25 -

Derivative Transactions to Which Hedge Accounting Is Applied

At March 31, 2013

Hedged Item

Interest rate swaps:(fixed rate payment, floating rate receipt)

Short-term bankloansMillions of Yen
Contract
AmountContract
Due after
AmountOne Year
¥ 400

¥ -

Millions of Yen
Contract
AmountContract
Due after
AmountOne Year

At March 31, 2012

Hedged Item

Interest rate swaps:(fixed rate payment, floating rate receipt)

Short-term bankloans

At March 31, 2013

Thousands of U.S. Dollars
Contract
AmountContract
Due after
Hedged Item
AmountOne YearInterest rate swaps:(fixed rate payment, floating rate receipt)

Short-term bank
loans

¥ 400

$ 4,253

¥ -

$ -

Fair
Value
¥ -

Fair
Value
¥ -

Fair
Value
$ -

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
The contract amounts of derivatives which are shown in the above table do not represent the amounts exchangedby the parties and do not measure the Group's exposure to credit or market risk.
The above interest rate swaps which qualify for hedge accounting and meet specific matching criteria are notremeasured at market value, but the differential paid or received under the swap agreements are recognized andincluded in interest expense or income. In addition, the fair value of such interest rate swaps is included in thatof hedged items (short-term bank loans).

- 26 -

18.

COMPREHENSIVE INCOME
The components of other comprehensive income for the years ended March 31, 2013 and 2012, were as follows:
Thousands of
U.S. Dollars
2013

Millions of Yen
2012
2013
Unrealized gain on available-for-sale securities:
Gains arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effectTotal
Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive income in associates Gains arising during the year
Total
Total other comprehensive income
19.

¥ 385
(11)
374
(85)

¥

46
(8 )
38
0

$ 4,094
(117)
3,977
(904)

¥ 289

¥

38

$ 3,073

¥ 293
(67)
226
-

¥ (384 )(384 )-$ 3,115
(713)
2,402
-

¥ 226

¥ (384 )$ 2,402

¥

0

¥

0

$

0

¥

0

¥

0

$

0

¥ 515

¥ (346 )$ 5,475

NET INCOME PER SHARE
Details of the basic net income per share ("EPS") for the years ended March 31, 2013 and 2012, were as follows:
Millionsof YenNet Income

Thousandsof Shares
WeightedAverage Shares

Yen

Dollars
EPS

For the year ended March 31, 2013:
Basic EPS
Net income available to commonshareholders¥

216

25,949¥ 8.33¥ 1,01225,949¥ 38.99$ 0.09For the year ended March 31, 2012:
Basic EPS
Net income available to commonshareholders

Diluted net income per share is not disclosed because there are no outstanding potentially dilutive securities.

- 27 -

20.

RELATED PARTY DISCLOSURESThe transactions between the Company and related parties
Transactions of the Company and related parties for the years ended March 31, 2013 and 2012, were as follows:
Fiscal year ended March 31, 2013
Millions ofYenType of Related Parties

Name

Address

Owned by certain directors of the Company
and their relatives.

Hasegawa Kosan Co.,Ltd.

Kakogawa-shi, Hyogo,
Japan

Harima Food, Inc.

Kakogawa-shi, Hyogo,
Japan

Millions of
Yen

CapitalAmountDescription of Business¥40

Insurance agent

30

Food manufacturing

Percentage of Equity
Ownership in the
Company(Owned)Direct 17.56-

Nature of Transactions
Payment of insurance

Amount¥ 13$ 138

Other current assets, end of
year

23

245

Sales of food

10

106

Note: Hasegawa Kosan Co., Ltd. is wholly held by Yoshihiro Hasegawa, who is the representative director of the Company, and his close relatives.
Harima Food, Inc. is a wholly owned subsidiary of Hasegawa Kosan Co., Ltd.
Fiscal year ended March 31, 2012
Millions ofYenType of Related Parties

Name

Address

Owned by certain directors of the Company
and their relatives.

Hasegawa Kosan Co.,Ltd.

Kakogawa-shi, Hyogo,
Japan

Millions of
Yen

CapitalAmountDescription of Business¥40

Insurance agent

Percentage of Equity
Ownership in the
Company(Owned)Direct 17.64

Nature of Transactions
Payment of insurance
Other current assets, end ofyear
Other assets, end of year

Amount¥ 13
25
23

Harima Food, Inc.

Kakogawa-shi, Hyogo,
Japan

30

Food manufacturing

Note: Hasegawa Kosan Co., Ltd. is wholly held by Yoshihiro Hasegawa, who is the representative director of the Company, and his close relatives.
Harima Food, Inc. is a wholly owned subsidiary of Hasegawa Kosan Co., Ltd.
21.

SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2013, was approved at the Company's Board of Directors' meeting held on May 21, 2013:

Year-end cash dividends, ¥7.00 ($0.07) per share

Millionsof YenThousands of
U.S. Dollars¥ 181$ 1,925- 28 --

Thousands of
U.S. Dollars

Sales of food

11

22.

SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Segment Information Disclosures" and ASBJ Guidance No. 20, "Guidance on Accounting Standard for Segment Information
Disclosures," an entity is required to report financial and descriptive information about its reportable segments. Reportable segments are operating segments or aggregations of operating
segments that meet specified criteria. Operating segments are components of an entity about which separate financial information is available and such information is evaluated regularly
by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, segment information is required to be reported on the same basis as
is used internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
(1) Description of Reportable Segments
The Group's reportable segments are those for which separate financial information is available and regular evaluation by the Company's management is being performed in orderto decide how resources are allocated among the Group.
Effective April 1, 2012, the Group changed its operating segments from "Resin & Tall Oil Products," "Paper Chemicals" and "Electronics Materials" to "Resin & Tall Oil Products,""Paper Chemicals," "Electronics Materials" and "Lawter" because the Group revised its administrative classification when the Company was demerged and adopted a holding
company structure. The segment information for the year ended March 31, 2012, is also disclosed using the new operating segments.
"Resin & Tall Oil Products" manufactures and sells paint resin, resins for print inks, tall oil products and synthetic rubber emulsifiers. "Paper Chemicals" manufactures and sells
paper strengthening agents, sizing agents and surface coating agents. "Electronics Materials" manufactures and sells electronics materials. "Lawter" manufactures and sells resins
for print inks and adhesives.
(2) Methods of Measurement for the Amounts of Sales, Profit, Assets, Liabilities and Other Items for Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, "Summary of Significant Accounting Policies."
As discussed in Note 2.f., effective April 1, 2012, the Company and certain domestic subsidiaries changed their depreciation method of property, plant and equipment. This change
had the effect of increasing segment profit of "Resin & Tall Oil Products" by ¥16 million ($170 thousand), segment profit of "Paper Chemicals" by ¥7 million ($74 thousand),segment profit of "Electronics Materials" by ¥3 million ($32 thousand) and segment profit of "other" by ¥18 million ($192 thousand) for the year ended March 31, 2013.
(3) Information about Sales, Profit and Other Items is as follows.
Millions of Yen
2013
Reportable Segment

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Other:
Depreciation
Net result of interest income andinterest expense
Notes:

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials

Lawter

Total

Other

Total

¥ 20,543
277¥ 20,820¥ 12,419
571¥ 12,990¥ 4,3670¥ 4,367¥ 25,297
246¥ 25,543¥ 62,626
1,094¥ 63,720¥ 1,597148¥ 1,745¥ 64,223
1,242¥ 65,465

¥172

¥817

¥155

¥(877 )

¥ 267

¥ 86

687

551

188

489

1,915

(49 )

(17 )

(15 )

(18 )

(99 )

Reconciliations¥

Consolidated(20 )(1,242 )¥ (1,262 )¥ 64,203¥ 64,203¥ 353¥1,068¥1,421

191

2,106

-

2,106

(20 )

(119 )(207 )(326 )"Other" division is business segments not attributable to a reportable segment and includes mainly real estate management, etc.
Reconciliations of segment profit (loss) include reconciliation loss of inventories of ¥60 million ($638 thousand), company-wide expenses of ¥91 million ($968 thousand)and foreign exchange gain of ¥888 million ($9,442 thousand) which are not attributable to a reportable segment, etc.
Segment profits (losses) are adjusted to certain other income and expenses from operating income in the consolidated statement of income.
Assets are not allocated into reportable segments as they are not used for the determination of the allocation of management resources and how to assess performance of
the Company.

- 29 -

Millions of Yen
2012
Reportable Segment

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Other:
Depreciation
Net result of interest income andinterest expense
Notes:

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials

Lawter

Total

Other

Total

Reconciliations

Consolidated¥ 22,415
192¥ 22,607¥ 13,235
555¥ 13,790¥ 4,739¥ 4,739¥ 29,80487¥ 29,891¥ 70,193
834¥ 71,027¥ 1,35572¥ 1,427¥ 71,548
906¥ 72,454¥ (12 )
(906 )¥ (918 )¥ 71,536¥ 71,536¥1,599¥805¥ 43¥(278 )

¥2,169¥222¥2,391¥(231 )

¥2,160

756

597

198

273

1,824

113

1,937

(3 )

1,934

(52 )

(27 )

(18 )

(40 )

(137 )(28 )(165 )(247 )(412 )"Other" division is business segments not attributable to a reportable segment and includes mainly real estate management, etc.
Reconciliations of segment profit (loss) include reconciliation gain of inventories of ¥55 million, company-wide expenses of ¥429 million and foreign exchange loss of¥194 million which are not attributable to a reportable segment, etc.
Segment profits (losses) are adjusted to certain other income and expenses from operating income in the consolidated statement of income.
Assets are not allocated into reportable segments as they are not used for the determination of the allocation of management resources and how to assess performance of
the Company.
Thousands of U.S. Dollars
2013
Reportable Segment

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Other:
Depreciation
Net result of interest income andinterest expense

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials

Lawter

Total

Other

Total

$ 218,426
2,945$ 221,371$ 132,047
6,071$ 138,118$ 46,4330$ 46,433$ 268,974
2,616$ 271,590$ 665,880
11,632$ 677,512$ 16,980
1,574$ 18,554$ 682,860
13,206$ 696,066$1,829$8,687$1,648$(9,325 )$ 2,839

$ 914

7,305

5,859

1,999

5,199

20,362(521 )(181 )(159 )(191 )(1,052 )- 30 -

Reconciliations$

Consolidated(212 )(13,206 )$ (13,418 )$ 682,648$ 682,648$ 3,753$11,356$15,109

2,031

22,393-22,393(213 )(1,265 )(2,201 )(3,466 )[Related information]
1.

Information about geographical areas
Net sales to customers and property, plant and equipment by regions for the years ended March 31,
2013 and 2012, were as follows:(1) Net sales
Millions of Yen
2013
Japan

South andNorth
America

Asia

Europe

Other

Total

¥30,184¥12,386¥7,842¥11,258¥2,533¥64,203

Millions of Yen
2012
Japan

South andNorth
America

Asia

Europe

Other

Total

¥32,791¥14,528¥8,011¥13,593¥2,613¥71,536

Thousands of U.S. Dollars
2013
Japan

South andNorth
America

Asia

Europe

Other

Total

$320,936$131,696$83,381$119,702$26,933$682,648

Note: Sales are classified into countries or regions based on a customer's location.
(2) Net property, plant and equipment
Millions of Yen
2013
Japan

South andNorth
America

Asia

Europe

Other

Total

¥15,194¥2,317¥1,823¥2,273¥891¥22,498

Millions of Yen
2012
Japan

South andNorth
America

Asia

Europe

Other

Total

¥15,031¥1,911¥1,768¥2,120¥718¥21,548- 31 -

Thousands of U.S. Dollars
2013

1.

Japan

South andNorth
America

Asia

Europe

Other

Total

$161,552$24,636$19,383$24,168$9,474$239,213

Information by principal customers
Information is not described because there are no customers who cover more than 10% of total consolidated net sales.

[Loss on impairment of long-lived assets by reportable segment]
Loss on impairment of long-lived assets by reportable segment for the years ended March 31, 2013 and 2012, was as follows:
Millions of Yen
2013
Resin & Tall
Oil Products
Long-lived assets¥102

Reportable Segment
Paper
Electronics
Chemicals
Materials¥-¥-

Lawter

Total

Other

Eliminations/
Corporate

Consolidated

¥-

¥102

¥7

¥-

¥109

Millions of Yen
2012
Resin & Tall
Oil Products
Long-lived assets¥-

Reportable Segment
Paper
Electronics
Chemicals
Materials¥-¥14

Lawter

Total

Other

Eliminations/
Corporate

Consolidated

¥-

¥14

¥-

¥-

¥14

Thousands of U.S. Dollars
2013
Resin & Tall
Oil Products
Long-lived assets$1,085

Reportable Segment
Paper
Electronics
Chemicals
Materials$-$-

Lawter

Total

Other

Eliminations/
Corporate

Consolidated$-$1,085$74$-$1,159[Amortization of goodwill and amount of goodwill by reportable segment]
The amortization of goodwill and amount of goodwill by reportable segment for the years ended March 31, 2013 and 2012, were as follows:
Millions of Yen
2013
Resin & Tall
Oil Products
Amortization of goodwill
Amount of goodwill¥-

Reportable Segment
Paper
Electronics
Chemicals
Materials¥-¥-- 32 -

Lawter

Total

Other

Eliminations/
Corporate

Consolidated

¥ 88
103

¥ 88
103

¥1
5

¥-

¥ 89
108

Millions of Yen
2012
Resin & Tall
Oil Products
Amortization of goodwill
Amount of goodwill¥-

Reportable Segment
Paper
Electronics
Chemicals
Materials¥-¥-

Lawter

Total

Other

Eliminations/
Corporate

Consolidated

¥ 80
178

¥ 80
178

¥-

¥-

¥ 80
178

Thousands of U.S. Dollars
2013
Resin & Tall
Oil Products
Amortization of goodwill
Amount of goodwill$-

Reportable Segment
Paper
Electronics
Chemicals
Materials$-$-******- 33 -

Lawter

Total

Other

Eliminations/
Corporate

Consolidated

$ 936
1,095

$ 936
1,095

$10
53

$-

$ 946
1,148

- 34 -

Corporate Overview (as of March 31, 2013)
FoundedNovember 18, 1947

Capital Stock

10,012.95 million yen

Head Office

3-8-4 Nihonbashi, Chuo-ku, Tokyo

Osaka Head Office

4-4-7 Imabashi, Chuo-ku, Osaka

Tokyo Head Office

3-8-4 Nihonbashi, Chuo-ku, Tokyo

Laboratories

Central Research Laboratory, Tsukuba Research Laboratory

PlantsKakogawa Plant, Tokyo Plant, Fuji Plant, Ibaraki Plant, Hokkaido Plant, Sendai
Plant, and Shikoku Plant

Sales Offices

Tokyo Sales Office, Osaka Sales Office, Nagoya Sales Office, Kyushu Sales
Office, Fuji Sales Office, Hokkaido Sales Office, Sendai Sales Office, andShikoku Sales Office

Number of Employees

53 (Consolidated: 1,575)

Number of Group Companies

37

Business Activities

Manufacture and sale of Resin & Tall Oil Products, Paper Chemicals,Electronics Materials, etc.

Websitehttp://www.harima.co.jp/en/index.html- 35 -

Principal Subsidiaries
Company name
Harima Chemicals, Inc.

5,000,000 thousand yen

Percentage ofequityparticipation (%)
100

Harima Trading, Inc.

48,000 thousand yen

100

Seven Rivers, Inc.

14,000 thousand yen

100

Harima M.I.D., Inc.

300,000 thousand yen

75

Harima Kasei Polymer Co., Ltd.

10,000 thousand yen

100

Nippon Filler Metals, Ltd.

45,000 thousand yen

100

HARIMA USA, Inc.

3,350 thousand U.S.
dollars
8,356 thousand Brasil
real

100

Harima do Brasil Industria Quimica
Ltda.

Capital stock

99.39

Harimatec Hangzhou Co., Ltd.

8,690 thousand Chinese
yuan

85

Harimatec Malaysia Sdn. Bhd.

1,356 thousand
Malaysian ringgit

85

Hangzhou Hanghua-Harima Paper
Chemicals Co., Ltd.

52,296 thousand
Chinese yuan

56.07

Nanning Harima Chemicals Co., Ltd.

48,234 thousand
Chinese yuan

95

Harimatec Czech, s.r.o.

7,000 thousand Czech
koruna100

Xinyi Rihong Plastic Chemical Co.,Ltd.

27,390 thousand
Chinese yuan

80

Xinyi Zhonglin Rosin Co., Ltd.

12,000 thousand yuan81

Lawter B.V.

17,600 thousand euro

90

Harima Chemicals (Shanghai) Co., Ltd

12,652 thousand
Chinese yuan100

- 36 -

Main business
Manufacture andsale of Resin &Tall Oil Products,
Paper Chemicals,Electronics
Materials, etc.
Real estate
management, etc.
Manufacture andsale of industrial
detergents, etc.
Manufacture andsale of tall oil
products
Manufacture andsale of resins forprinting inks, etc.
Manufacture andsale of electronicmaterials
Control of U.S.
operations
Manufacture andsale of rosin andits derivatives
Manufacture andsale of electronicmaterials
Manufacture andsale of electronicmaterials
Manufacture andsale ofpapermaking
chemicals
Manufacture andsale of rosin andits derivatives
Manufacture andsale of electronicmaterials
Manufacture andsale of rosin andits derivatives
Manufacture andsale of rosin andits derivatives
Control of Lawter
Group’soperations
Support ofChinese businessDirectors and Corporate Auditors (as of March 31, 2013)
President
Senior Executive Director
Executive Director
Executive Director
Executive Director
Director
Director
Director
Director
Director
Director
DirectorStanding Corporate Auditor
Corporate Auditor*
Corporate Auditor*

Yoshihiro Hasegawa
Nobuo Makino
Masanao Kono
Teruo Kaneshiro
Masashi Inaba
Satoru Iwasa
Yorishige Matsuba
Yasuhiro Mizutani
Yoshinobu Matsuda
Mitsunori Kiyono
Fumiaki Tsuchida
Ichiro Taninaka
Jyoichiro Tanaka
Tatsuya Michigami
Hidenori Hiramatsu* denotes Outside Corporate Auditors.
Status of Shares (as of March 31, 2013)(1) Total number of shares authorised to be issued 59,500,000(2) Total number of shares outstanding
26,080,396(including 131,247 shares of treasury stocks)(3) Number of shareholders
2,912(4) Major shareholders
Status of shareholding
Number of shares held
Ratio of number of shares held(Thousands of shares)
against total number of shares
outstanding (%)
Hasegawakosan Co., Ltd.
4,558
17.56
Yoshihiro Hasegawa

1,737

6.69

Sumitomo Mitsui Banking
Corporation
Harima Chemicals Mutual
Prosperity Association
Shorai Foundation for Scienceand Technology
THE MINATO BANK, LTD.

1,094

4.21

934

3.59

805

3.10

692

2.66

687

2.64

Shorai, Ltd.

Keihansin Kougyou
672
2.58
Corporation
The Master Trust Bank of Japan,
559
2.15
Ltd. (Account in trust)
Hyogo Prefectual Credit
521
2.01
Federation of Agricultural
Cooperatives(Notes) 1. In “Number of shares held,” figures less than one thousand are rounded down.
2. Ratio of number of shares held against total number of shares outstanding is determined basedon the total number of shares outstanding minus the number of treasury stocks (131,247
shares), which amounts to 25,949,149 shares. The numbers shown are rounded down to two
decimal places.

- 37 -